IZA DP No. 5734: A Note on Inequality Aversion Across Countries, Using Two New Measures
Studies using the Gini Index as a measure of income inequality have consistently found a positive and significant effect of the Gini on both happiness and life satisfaction. Two new measures used here – the ratio of persons in the lowest income decile relative to the number in the highest, and the ratio of the number in the lowest social class relative to the number in the highest, in a given country – as developed from the World Values Survey data, are shown here to have a negative and significant effect on both happiness and life satisfaction. This effect holds overall across countries, and for individuals within most income and class categories.